Monday, June 13, 2011

Showdowns Coming In States And In Congress

This will probably be remembered as the year of the showdowns in state legislatures and the U.S. Congress. It was bound to happen sometime, and now that time has come.

In those states where the governor is of one party and the legislature is controlled by the other party, or split; and in Washington, DC where the president is a liberal Democrat and the House of Representatives is controlled by conservative Republicans, the confrontation is epic and historic.

The Democrats, the liberal party, want to preserve as much as possible many New Deal entitlements and programs, and to raise taxes as much as they can to pay for them. The Republicans, the conservative party, want to scale back or eliminate as many of the entitlements and liberal programs as they can. They have told voters, at both the state and national level, that they will not raise taxes. More than any time in the recent past, the two parties are canyons apart on the issues, and unlikely to arrive at the usual kind of compromises in the usual way.

The Republicans received some mandate in the 2010 national and state elections when their candidates won massive victories on these issues. But now that individual Republican governors and legislatures are following through on their promises, there are second thoughts by some voters as they see entitlements and programs disappear. In most states, balanced budgets are constitutionally required. In Minnesota, the governor is a liberal Democrat (there called the Democratic-Farmer-Labor Party or DFL) and both houses of the legislature are decisively in Republican control. The conflict between the two sides over revenue and expenditures was not resolved in regular session of the legislature, and in the interim, the two sides have not moved much closer to a resolution. On July 1, lacking an agreement to balance the state budget, the state government will close down. Massive layoffs of state employees, and severe cutbacks of state services and facilities (such as state parks) will take place. Each side perceives that the public will side with it at this point, and an argument can be made to support each of their views. Normally, the DFL would have the advantage, since voters traditionally do not like to be inconvenienced. But will this year be different?

This is the mystery about this state’s showdown and all the others. Has the public at large realized the time has come to change the fiscal road governments in most states, and at the federal level, have been traveling? Social Security used to be the third rail of U.S. politics. Conservatives would suggest reforms, and liberals would batter them at the polls by scaring voters that their entitlements would be taken away. Finally, that is no longer true, and there seems to be widespread acceptance of extending the age at which Social Security benefits begin and other basic reforms. But Medicare/Medicaid now appears to be a new third rail, and proposed conservative reforms are not a slam dunk as a recent special election in New York state may indicate.

We live in a time of extended economic recession, marked by chronic unemployment, depressed prices in real estate, very low interest rates, and a general lack of confidence in economic prospects by both consumers and entrepreneurs.

As I see it, the voters’ choice is only about the timing and circumstances of a general change of direction of national and state economic policy. They can vote for Republicans in 2012 (and for centrist Democrats who agree that change must happen) and expect a somewhat orderly transition. Or they can return liberal Democrats to power in 2012, and passively wait for profound economic axes to fall. Either way, the entitlements will be eliminated or be reduced. The difference will be the level of hardship and suffering, since orderly transition will likely be much less brutal and sudden than a transition brought on by stock market collapse, industry failures, general economic chaos, and sudden government paralysis.

We do live in a representative democracy, and voters do have choices. They demonstrated this in 2010. In 2012, they will have to make choices again. The issues are the same, but the stakes are greater. While democracy is clearly the best for of government in the world, no one said it would only be a summer picnic.

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